Casino deal costly to Michigan

$337 million in revenue lost from Indian casinos over slots monopoly.

$337 million in revenue lost from Indian casinos over slots monopoly.

May 09, 2006

DETROIT (AP) -- The state of Michigan has lost $337 million in revenue from seven Indian tribes because of an agreement that allowed tribes to halt payments when they lost a slot machine monopoly, according to a newspaper's analysis. The total in lost revenue could double by the time the pact with the state expires in seven years, the Detroit Free Press reported. The tribes agreed to pay 8 percent of their slot revenues to a state fund under a 1993 settlement. The payments were to continue as long as the tribes had a slot machine monopoly in Michigan. That monopoly ended in the late 1990s. If the payments had continued, the state would have collected $337 million more through 2005, the newspaper said. The newspaper also said it found that some tribes were circumventing their 1993 promise to Michigan authorities to give 2 percent of slot machine and video poker revenue to neighboring communities. The Keweenaw Bay Indian Community used about $700,000 of the local aid money in 2001-03 to pay its members' property taxes, the newspaper said. It said the tribe also required neighboring communities to give some of the local aid money to private groups such as a snowmobile club, girls hockey group and ski hall of fame. Asked by the state about its expenditures, the tribe replied that Michigan authorities lack authority to audit its books. Tribal lawyer John Baker did not respond to requests for comment, the newspaper said Monday. In addition, the newspaper said it found that the state's tribal casinos attract almost no scrutiny from state or federal authorities. Dan Gustafson, executive director of the Michigan Gaming Control Board, acknowledged the agency's history of weak oversight. He and federal officials said authorities lack staff and funding. "Given the authority that we have and the resources that we have, we're doing the best job we've done since the casinos opened," Gustafson said. The tribes say they scrupulously regulate themselves, so no outside oversight is necessary. "Take a look at Indian gaming across the country -- you rarely hear a story about fraud or corruption or mob influence," said Steven Morello, former general counsel to the Sault Ste. Marie Tribe of Chippewa Indians. Kathryn Tierney, a lawyer for the Bay Mills Indian Community, said "there is every incentive" for tribes to run clean operations, treat customers well and meet obligations to the state. "The revenue generated by gaming is the tribe's revenue," she said. "You are protecting a tribal asset."